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Worldwide Exchange

News/Business. Brian Shactman. Business news including in-depth analysis of worldwide trends.

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U.s. 61, Us 22, China 14, Christine 14, India 13, Europe 11, Shanghai 11, S&p 9, Ubs 8, Asia 7, France 6, Lowe 6, Becky 5, Volkswagen 5, Schwab 4, Rebecca 4, Paris 4, Zurich 4, Hong Kong 4, Bertha Coombs 4,
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  CNBC    Worldwide Exchange    News/Business. Brian Shactman. Business news  
   including in-depth analysis of worldwide trends.  

    August 17, 2009
    4:00 - 6:00am EDT  

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we know the declines in europe have already begun in asia. christine, how are the markets there looking?g? >> not too well, rebecca. as you know, asia is not getting a chance to react to the u.s. confidence data coming out on friday. a sell-off in the region. the kospi down 2.8%. the economy did nothing to lift the shang hang market. the hang seng down 3.6% and the sensex 2.3%. in terms of nymymenymex, down a. brent should be lower as well following it. brent is trading around the
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ranges of $70.95 a barrel. bertha, please give us some good news. >> christine, we seem to be taking our tone from you. the market looks to extend losses. futures well below fair value. we'll get another read on consumers. earnings from lowe's and data later from housing from the national association of realtors. those are likely to weigh on the markets. we've got dow futures 120 points or so below fair value. nasdaq futures well below. s&p futures as well. taking a look at the bond market, we are seeing a move to safe havens, the yields lower. the guild in london, a record low yield. the ten-year bund at 3.3%. the ten-year note here.
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we are going to hear from ben bernanke at the end of the week. they have the jackson hole federal reserve reunion they do this time of year. steve liesman drew the short straw and is going to have there to cover it. the ten-year yield at 3.25%. taking a look at gold. seeing a move toward safe havens. gold is not one of those spots right now. it is down quite a bit, down 8.8 at the moment. rebecca? >> joining us is now is mark matthews, asia pacific. mark, let's start with you. does this undermine the bull
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market view, or can we not take too much from the one-day moves? >> i think we're seeing an overspill from last week's confidence data from the u.s. bear in mind, we've had an extended gain on thin volumes. the ftse trading on 95% of its daily average. on thin volumes, markets tend to grind up. the seasonal aspect of the summer. i think for me, we can't take too much into one particular move for one particular move. it's more of a period of a few days or a few weeks. we look at shorter term to medium term in the markets. for me, the real acid test will be september. i think volumes will increase and perhaps a more decisive move in the markets. >> september is the point at which we'll know more what is going on.
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mark, if i can come to you, what do you make of the sell-off today? do you agree we have to wait for a few more weeks before we get proper judgment on what's going on? >> well, yes. one day's movement is something one should base one's entire strategy off of. i would say the new shanghai is particularly sharp. i counted before i came up here, the 11th worst day going back to 1999 in shanghai. 5% drop in the market there. if you look at the charts, shanghai was really the market that first stopped going down, back during the october banking crisis. and so i guess people are worried that if shanghai is now turning around very sharply, it cut through the 50-day moving average like butter this morning. maybe that says something about the rest of the markets in the world. >> mark, this is christine.
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do you think what's happening in shanghai could have more lingering effects here in asia as opposed to what's happening in the u.s., for instance? >> well, if you look at the correlations of various stock markets, the mainland chinese stock markets are not tightly correlated to the rest of the stock markets of asia or the world. but they definitely did lead the others. they particularly led the oil prices, i must say. if you overlay the asia market with oil, you'll see they definitely led oil. you know, it's been on such a rip-roaring tear that i'm not particularly surprised. but, you know, nobody likes to see a market fall 6% in one day. it's quite scary. >> it's bertha in the u.s. looking technically, we did see the s&p move much higher. one of the strategists last week was talking about the fact we've seen this retracement move.
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at this point, if we continue to see asia sell off, do you see the s&p starting to lose steam as well in a similar way? >> yes. i think all eyes now are on the down side to key support levels in all major indices. personally, i think we're undue a nice uchb winding in the u.s. and asian markets as well. perhaps more money will come into the market. clearly cash on the sidelines. this is still a trader's market. there is always opportunity in market. perhaps because we've seen a more sustained rally recently, that's not to say we have to pile in here. there will be further opportunities in the market to introduce more money. there will be buying opportunities. i think we need to retest critical levels. there is also breakout thresholds in the ftse and the
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200-day moving averages, which are moving a little bit lower. >> mark, do you think right here we'll see a little bit of retracement and consolidation and then move higher? september, as we all know, is a really difficult month often for the markets. >> i've noticed a definite change in markets here in asia where in the first half of the year the five countries with the strongest gdp growth were also the five countries with the strongest stock market performance. in retrospect, it was easy. you bought the kocountries that had strong gdp growth. on friday, japan came out of recession and some of the european countries as well. i'm worried so much money went into the asian markets in the
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first half, they could be susceptible to this. i can see the developed markets in this part of the world outperforming australia, new zealand, hong kong. i think for the next quarter, that trend could continue, which would be off the on markets like india in particularly actually. >> mark, this is christine again. one story we're focusing on, china's wealth fund, cic to buy u.s. mortgages. what does it say about the chinese appetite for u.s. trishes, and is this an ideal investment for the chinese? >> gee, i didn't see that news headline. i would say $2 billion isn't a lot of money for china. it's a lot of money for the rest of us but not for china. the chinese have been very explicit they want to take advantage of the weak prices globally to make acquisitions.
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they've been trying to make acquisitions in resources around the world. i don't read anything huge into it. sorry, christine, not one way or the other. >> thanks for joining and sharing your thoughts with us. mark matthews and aaron snipe. banker bonuses under attack from all sides in the u.k. chancellor alstair darling told the sunday times he will change the law to ensure compensation is not paid to employees whose actions put banks at risks. the comments come with reports from bar clays is offering a massive package for several employees being offered as much as $50 million in cash and stocks. a german watchdog saying that any bankers who take
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unjustifiable risks will be forced to repay their bonuses. the u.k., the staffing group did say rates of decline slowed in its key u.k. market as well as asia-pacific. christine? >> japan is the third g-8 country after germany and france to pull out of recession. it marked the first growth in five quarters as government stimulus measures filtered through. however, there were concerns about the sustainability of japan's recovery. shares in fortesque surged
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today. under the new deal, they will sell iron ore 3% below market value. they are working on getting $6 billion in funds from china. the company adds that the price deal helps to shore up bilateral ties with beijing. >> andrew compani company cuomo expected to file a lawsuit against charles schwab. several brokers agreed to buyback securities from investors. schwab said it had nothing to do
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with the collapse. shares trading down 1.5%. last month the texas-based bank said there was substantial doubt it could stay next as loan losses left it strapped for cash. the guarantee is $16 billion in assets. the offer comes as the government shut down alabama's colonial bank on friday. you can get the latest in news, videos, blogs and what's going on here if you missed any interviews on cnbc.com. drop us a line, worldwide@cnbc.com. >> an unexpected drop in u.s. sentiment aggravate the market.
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plus, japan climbs out of the recession in the second quarter. is the economy hostage to the fate of its major trading partners? ken feinberg said he could call back executive compensation while finance min snerz europe say they are ready to crack down on excessive bonuses. tdd# i'm racing cross country in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.
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nefits of adding abilify.
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welcome back to the show, "worldwide exchange." we'll look at the equities market around the world. we're joined by our reporters all over the place. karen joining us from zurich if my eyes don't deceive and silvia from frankfurt and stephane from france. alsosoin the u.k., the ftse 100 at this stage is lower by as low as 1%. let's take a quick check on what's going on the ftse 100 specifically. we are being led lower on that market by the basic resources stock, 1.6% lower.
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we really are looking at a day low. basic resources stocks are suffering the most. the u.s. consumer confidence data on friday, worse than expected. that reignited fears that there is uncertainty over the global recovery story. that has a big impact on the basic resources stock. there were some numbers upbeat. but the likes of xstrata down by 3.8%. fasilla itself down. one of the big u.k. recruitment companies opening on weaker footing, now managing to pace some gains. but they are seeing a slowdown in deterioration in the u.k. and asia pacific. they expect the third quarter
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will continue to be challenging. not too much for excitement as far as recruitment companies are concerned. let's get out now to zurich and found out from karen what's going on over there. >> thank you so much. we started off the week in negative territory. down 1.5%. let me start with the biggest gain gainer. biocare, shares higher by 3%. that after bankers had it to the zurich 1 listing, the most compelling stock for the next 12 months. ubs shares down 1.4%. there are new developments in the tax investigation case. a california client of ubs has pleaded guilty to evading taxes from the u.s. government. in his case though the tax front also involved chaneling more than $1 million into a ubs
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account. that account was held in the name of a hong kong entity. that's the second time we see a ubs client pleading guilty to tax evasion. secondly, the out of court settlement in a civil case. we're expecting details later this week. meanwhile, the swiss newspapers are reporting we'll see 5,000 u.s. client names be handed over to u.s. authorities. before i let you go, let's talking about the pharma company. the fda gave its approval for the multiple sclerosis drug. annual sales seen at $450 million a year. that's it from zurich. over to germany with silvia. >> what we've got in germany is more from friday. we decide the bottle is half
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full, this time the bottle is half hospital. a follow-through from friday. the u.s. closed. in asia, an ample excuse to take money off the table. boy did they take money off the table again for volkswagen. a virtual collapse of the share on friday. a follow-through from that, 8%. we were down in the volkswagen share almost from the get-go. really the old story. now we're more than 10% down. the old story, we need a capital increase for volkswagen around 4 billion.n. the only good news in the whole porsche merger was that the options would not hit the market. the greater part of that would go over. we're still let loose with a capital increase of the details with which we'll be told. but it will largely be in the preference share rather than the ordinary share. a whole chunk of capital coming
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on to the market and a whole bunch in the preference. and not really sure whether that resolves the debt situation at porsche. ultimately, they will make it work. how much burden it could put on the share for the intermediate time remains to be seen. the bane of volkswagen, maybe they're suffering from the lack much news rather than the plethora we saw last week.. what's up in paris? >> the same picture. we are extending in paris, decline.e. we already had friday afternoon the cac off 1.8%. the banks trading lower, as the government wants to keep the pressure regarding the payment of bonuses. newspapers creating the finance minister who wants to stop the excesses in terms of bonus payments in france. we heard over the weekend that the largest french bank paid $50 million to its top ten employees
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last year after 112 million in 2007. they claim the amount will decrease in 2008 and that the bank will pay only between 15 and 16 million euros to its top employees this year. still, there is increasing pressure on it. edf also trading lower, the electricity producer. still outperform approximating slightly the french market today after the sunday times yesterday reported that several companies and investment funds have expected an interest for the u.k. distribution network of edf. chinese billionaire would be under pressure.. positive approximate news for the company. that's why the stock is outperforming the french market. let's have a look at the asian market. >> thank you very much. it was a very difficult session for the asian markets here today.
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tracking the losses from wall street last friday. really the markets started to cascade in the afternoon trading session, as we saw the u.s. futures picture look worse and worse. the dow pointing to a triple-digit decline on today's market and appears to be getting worse through "worldwide exchange." looking at the worst affected markets in the greater china region, the shanghai composite slumping 5%, the worst point the market hit in over two months on concerns of a slowdown that we could potentially see in the u.s. the consumer confidence didn't help too much. really the picture of the commodities market. a lot of risk from the commodities last friday. we had base metal prices much lower. we saw this cascading losses across the commodity stocks in china and also the ore.
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in hong kong, weighed down by the losses in china. the economy improved in the second quarter, up 3.3%. the hong kong government upgrading their forecast for the second half of the year. back to you in the u.s., bertha. >> thanks very much, adam. here in the u.s., a fairly busy week for economic data. if you're on vacation, luck you. we'll get wholesale inflation of the ppi and get housing numbers as well. the national association of home builders survey at 1:00. and reports from lowe's from its second quarter. profits are forecast to drop as the home improvement chain continues to feel the impact of rising foreclosures. cooler weather in the
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northeastern u.s. may have hurt air conditioners and seasonal items. home depot reports tuesday. we'll hear from them as well. that's your global stock watch. >> coming up on "worldwide exchange" -- japan follows france and germany out of recession in the second quarter. can exports and stimulus measures continue to prop up the economy? >> plus, usain bolt smashed his own record in the 100 meters, an astoning 9.85 seconds. here's a look at the fastest man on the planet. don't blink, you'll miss it. we'll be right back. when this hotel added aflac to compliment their benefits package aflac! it made a big splash with the employees yeaaaahhhh! find out more at aflac!... ...forbusiness.com (laughter) right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road.
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i'm christine tan. in asia, japan pulls out of its deepest recession in decades. >> in europe, shares following asia's low with banks and commodity-related stocks the biggest losers. >> i'm bertha coombs. in the u.s., concerns about consumers pulling back spending as futures are sharply lower. >> let's take a check on the markets as we just did in the headlines. we have had a pretty negative session across asia and then here in super as well. as the trading got under way
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here. ftse global 300 index illustrates that, down by 1.4% at this stage. just coming off the lows of the session, not by very much. european bosses have seemed to deteriorate as the morning has gone on. looking at declines of over 1.5%. the cac in paris. we are looking at a weak session for the ftse and the dak and sm switzerland. all down between 1.4 to 1.5%. in the forexmarkets, let's look at the live market. the euro losing ground against the dollar, 1.4126. sterling under pressure. we have data later in the week.
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but 1.6348 for the sterling. >> big sell-off for asia, getting a chance to react to the u.s. confidence data which came out on friday. sentiment shaken across the region. nikkei down 1.5%. economic data showing japan emerging from a recession. and the kospi down 2.5%. the shanghai down 5.8%, suffering the most from concerns of oversupply. and the hang seng down 3.6%. the sensex down 2.8%. overall, a very negative session here in asia. bertha?? >> shaping up to be the same story here in the u.s., christine. carryover obviously from friday's -- that negative consumer sentiment information,
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really disappointing the markets. today we're going to get more information on the consumer via housing statistics. we'll have the national home builders index and also hear from lowe's ahead of the open. futures down 120 points below fair value. the nasdaq 20 points below fair value. scorching if we continue on that date. the s&p 15 points below.w. taking a look at bonds, we are seeing a safe haven play. a little money coming into the bond market. the ten-year at 3.51%. the data today focusing on housing. u.s. consumer sentiment dropped unexpectedly. that's when it began. it dropped unexpectedly in august, soaking series that consumers' fears might
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short-shorshort short-circuit the market. david, we've been talking about seeing unemployment stay high for a while. but it seems to have come as a shock how weak the consumer is. >> that's right, it was. 's go back to the consumer numbers to the retail numbers. if you strip out what was really a relatively strong effect from the cash for clunkers, auto sales, strip that effect out, a pretty soft number in core retail sales. that continues to show refren retrenchment. q2 saw a retraction. it looks like as we go into q3 we should see a positive number. the carb for clunkers will boost retail sales into the third quarter. stripping that effect out, it shows the consumers still on the back foot. the question is, where is the recovery in that consumer going to come from?
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>> that is the question. the interesting thing is we are seeing some recovery in terms of gdp growth.h. now in japan. we saw it in france and germany last week. could the weakness in the u.s. short-circuit those recoveries?? >> you're seeing a short-term dynamic. a pick up in world trade, which is probably associated with an inventory correction, whereby firms met limited demand by running down stocks aggressively. now they're not running down stocks as aggressively. the short term interest comes through. we're trying to see beyond that, is there going to be a sustainable pickup in demand? are we going to see consumers start spending again? so far, there's very little evidence for either. for very good reason, particularly in the u.s. we think as we move forward, stimulative policy from the fed
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should leave u.s. households in a strong position as we move into next year. they should start gradually increasing. that's why policy has involved significant government stimulus is going to support growth not just in this year but 2010. it will buy time for consumers to make those key adjustments. >> we should also get a better idea what's going on with the u.k. consumers. retail sales, they haven't declined as much as you would expect. and will people start to factor in rates rising some point in the medium term? how does that build into a picture of what's going in the summer's mind? >> the forecast for thursday remains flat on the month after a strong month in june. either way, eur looking at an annualized quarterly growth of
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3.2%. one of the things it's boosting at the moment is that u.k. surm consumers are consuming abroad rather than at home. next year, it obviously becomes harder. we would expect the mnc start to increase rates. we would like to have further tax hikes before the end of next year. the pressure on the consumer will remain relatively hard. hopefully upper areas of the economy will offset that and the u.k. should see a subdued crisis. i think it will be difficult for 2010 and dwland as webeyond tha. >> japan emerging from their recession. >> with the election outcome,
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whether the dpj, if it becomes the new government, starts to bring in new fiscal stimulus specifically designed to boost households. for now i think what we're seeing is a very welcome short-term adjustment based on inventory adjustment. japan's industrial production up over 8%. couldn't not rise against that sort of background. we think that growth is likely to fade as we come toward the end of this year. the question mark for 2009. will consumers pick up and firms start investing again? >> david, thank you very much for being with us. let's hop over to india and join ayesha live for the indian business report. hello. >> hi. thanks for that. with the rest of asia down a good 3% after a gap down in
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trade today. broader markets also down today. talking about the front line comes as you do have the high real estate pace cracking in trade today. anywhere between a good testify to 5.5% apiece. not just that. banking is giving way. metals, of course, is being softened across the board. meantime, one stock in focus, it is defending that mark-up until now. the ministry of government affairs say they're not happy with the report that the ssi put out. a fresh probe has been ordered. in trade today, a weak market is what we're looking at. back to you. >> ayesha, thanks for that.
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let's get back to japan where it shows they have ended their worst recession since world war ii. let's get more from the managing director at calhoun capital markets out of tokyo. thanks very much for being with us. you seem to think a sustained recovery is possible in the third quarter. you've also admitted you're more optimistic than the boj and even the government. why is that? >> the q2 gdp numbers were stronger. however, there was disappointment among some, such as capital expendures, housing numbers and output. this economy is weak. however, we expect the recovery will be sustained and particularly after this general election. we can expect policy changes and
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dpj will make another economic package. >> how dependent is japan and the japanese economy on recovery elsewhere in the world to keep up that positive gdp growth we are beginning to see now? >> look at the q2 gdp numbers. they closed at 0.9%. still, i would expect the japanese economy to depend on demand. however, export growth has been driven by the rest of asia. we must wait until the u.s. and european economies recovery. >> you seem to think that the
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dpj party will win the election at the end of the month. >> to a certain extent, stronger gdp numbers could affect that. look at the details. 0 apost 0.3% to gdp growth. the total size of that was more than 4% of gdp. it demonstrates a recovery by policy. >> it's bertha coombs in the u.s. we're seeing global markets sell off today. are you concerned this might be the start a real sell-off, or do you think basically markets here
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are taking a breertather, thing are still on track? >> the japanese economy does not just depend on u.s. consumers. how u.s. consumers can spend. these numbers disappointed the japanese equity markets as well. the global market has been waiting for the recovery in the u.s. expenditures. this is the case in japan as well. that made some disappointment in the equity market today in japan. >> we'll have to leave it there. thank you very much for your time today. the managing director at capital markets. let's move on to the middle east and get the latest there. what's the latest? >> christine, after what was -- seeing a positive run over two
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weeks at dubai financial, yesterday the market closed down 2%. the sell-off continues today. the market is down more than 3%. obviously taking its cue from global markets. european markets as well. we're seeing sell-off over the last couple of weeks. as i just mentioned, this up trend on thursday, last week, the market goes up 2.7% following an announcement that -- by the ruler of dubai which appointed and named the board of the support fund, in charge of allocating the funds from the $20 billion bond fund issued back in february. this committee will allocate the funds to government-relateded
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entities which has been the most affected by the economic downturn. also, news for you on inflation rates. according to a recent report by deutsche bank, these inflation rates may head into negative territory in the second half of the year. mainly dragged down by food and housing prices. they are expecting real estate prices to decline further in the second half of the year, which will in turn drag the housing forecasts lower. deutsche bank's average rate of foreclosure would stand at 1.5%, down from 10% in 2008. that's it from me in dubai. back to you. >> thanks very much. christine? >> a couple of stories we're watching here. royal dutch shall eyeing gas producer arrow energy. they are offering nearly $2.5 billion for the aussie firm.
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last week, arrow confirmed it had talks over the possible sale of its assets. shares up 3.5% in sydney. royal dutch trading down 1%. cic will reportedly set aside $2 billion. under the u.s. treasury's pip. reports that talks with black rock and invesco. they have $200 billion in assets under management. shares in fortesque shared 3% today. they struck a price deal to sell
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iron ore 3% below the deal struck by rio tinto. the company says it doesn't need regulatory approval for the funding and says it shores up financial tie wise beijing. >> shares with web bank trading lower. the swedish bank has a balance sheet weighed down by its large exposure to the baltic region.. the ceo said he saw no reason to raise additional capital. court documents show the swiss bank helped americans hide money using enterprises set up in hong kong. the report reveals the effort ubs put into covering up the existence of foreign bank accounts. ubs handled over 250 names as part of a criminal settlement
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with the u.s. government back in february. sales at clothe retailer h&m missed in july. they missed compared to the same period last july. bert bertha? >> the pay czar says he has clawback authority. the company that have not met their terms had to submit pay plans for top executives. citigroup included the contract of energy trader andrew hall. hall wants his deal honored. a deal valued at $100 million for last year. feinberg's jurisdiction may be limited, however, when it comes to feinberg's contract. because he has been limited to contracts signed after february
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11th this year. hall's was signed before that date. it might be grandfather. warren buffett keeping a close eye on the health care sector. berkshire hathaway raised its sa stakes in johnson & johnson. the value of berkshire's stock portfolio rose 20% in the quarter. in frankfurt at this hour, berkshire shares up 4.5%. j&j off fractionally while home depot and united health both fractionally higher. >> today's sell-off in the market, you want to stay up-to-date with information. you can get news, video, blogs, anything moving the market today at cnbc.com.m.
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still to come on "worldwide exchange" -- it's emerging markets week on cnbc. we'll be heading out to india to see how china is faring. plus a check on the latest currency markets. back after this break. $$$$$
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welcome back to the show. we are going to take a check on the currency markets before we get to our guests here. we'll get analysis on these figures. let's take a check on the dollar-yen. a bit of yen strength coming through today. the euro, dollar, 1.41. significant pressure on sterling. dropping by 1.1% against the dollar. we're joined by the director of fx institutional sales at deutsche bank. thanks for coming on today. why don't we start by talking sterling and the pressure ta we're seeing there. a few important things come up this week. bank of england minutes, retail sales inflation data. why the pressure today on sterling? >> well, i think the market is still a bit reacting on the latest financial announcements
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in terms of further quantitive easing and today it seems we have a perfect fit for the odd correlation pattern. apparently the michigan index from last week echoed into the new week. we have lower equities. we have lower metals this morning. and people sold gross entity index and also sterling. i think in particular in sterling against dollar, the cable, we also traded dollar r strength so far. in terms of euro-sterling looks a bit better. we expect some resistance around 0.8650. >> speaking of the euro, what do you think will happen this week in general?
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we have data coming out tomorrow. what should we expect as the week goes on? >> well, i think we test the down side in a couple of ways. i think 1.4050 in euro-dollar, maybe down to 1.3860. cable further tested to the down side. and also the yen. i think the yen is a perfect indicator. last week we discussed about regime shift from equity markets from risk appetite. interest rates driven currency market. still too early to draw any firm conclusions from that. this morning, i think we trade risk aversion.. people inclined to buy dollars. massive dollar buying during the asian session. i think this will go on unless that is much better tomorrow.
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>> it's bertha in the u.s. how much of this do you think might be related to just unwinding of positions? we're coming at the end of the summer, looking at the end of the month in the next couple of weeks. not that many players in here. is this really data driven? >> part of it is data driven. but you're absolutely right. i think we're in the summer period. i think we observed -- in terms of market participants, that is pretty much driven by model accounts. so we haven't seen any firm names so far. which are in the markets currently.y. this is the reason why we traded even last week, pretty rangy. i'm a bit scared to see that today. we opened pretty weak. maybe we get better data tomorrow. then maybe model accounts are forced to cut back their positions. overall, the positions shows that the market is it slightly under way dollar.. this is maybe the reason we see a further aappreciate yapgz of the dollar in the week.
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keep an eye on it. i think market participants are mainly model accounts. >> this is christine. the japanese currency, the yen rising on risk aversion. how far high do you see the japanese trading and could it it reach 19 to the dollar? >> maybe for this week i expect 93 where we can trade down to. especially on the back of the risk aversion. also, i think there is no structural demand for dollars out of japan these days. because interest rate dif rentials are not in favor for the dollar itself. option books on the down side. we expect they need the sales further, dollar-yen to cover that on the down side. yes, i think the yen is able to further appreciate. >> thanks for coming along. director at fx institutional
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sales at deutsche bank. coming up in the next hour of "worldwide exchange" -- regulators around the world are taking sharp aim at banker bonuses. our guest host said if the u.k. becomes more strincht we could kiss our financial services industry goodbye. >> don't blink or you might miss it. usain bolt still the fastest man in the world, smashing his world record in brazil over the weekend. 100 meters in 9.58 seconds, unbelievable.
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i'm christine tan. in issue is asia, chinese stocks drive 6% on concerns about oversupply. >> i'm becky mean. in europe, shares following asia low can banks and commodity-related stocks the biggest losers. >> i'm bertha coombs. in the u.s., it doesn't look much better. futures are sharply lower. >> if you're just joining us in the united states, hello and welcome to the start of your global day with "worldwide
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exchange." we broadcast live from the u.s., asia and europe. i'm afraid the market is suffering a hangover from the numbers last week. right now dow futures down 150 pounds below fair value. the nasdaq futures looking leak a bloodbath if we open at this level as well. down about 26 points or so. the s&p also looking very low. we are seeing a move to those safe havens into bonds this morning.g. the dollar stronger. we were getting folks moving ten-year bund. looking at the ten-year note in the u.s., the yield is now at 3.51%. becky, europe seems to be taking the baton from asia this morning. >> it certainly does. equity markets generally looking pretty weak. let's start with the ftse global
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300. looking at declines of 1.5%. close to the lows of the session. if we see how that looks from an european angle, the markets opened distinctly lower here. every time we check, they're lower than they were the previous time. looping at declines of over 2% for the dax and cac. here in the u.k., the ftse down by 1.7% and 1.6% too. in switzerland, significant declines in the equity markets. let's check on the dollar rates as well and see what's going on in the forex markets. yen strength. euro-dollar, 1.41. sterling is coming up real pressure against the dollar, down 1.2%. almost 1.63 is where we stand on that particular level.
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christine, it does seem to have started on a negative footing in asia, doesn't it? >> yes, rebecca. asian markets getting a chance to react to those u.s. confidence numbers coming out on friday.. it's not a pretty sight here in asia. the market is tanking across the region. nikkei down 3.5%. even numbers showing the economy lifting out of recession did nothing for the japanese market. the shanghai market suffering the most today, diving almost 6%. all that optimistic about china leading the world out of recession gave way to concerns that maybe this particular market, the rally is overdone. hang seng down 3.6% and the sensex down 1.3%. we have hurricane ana downgraded to tropical depression. hurricane bill is intensifying.
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could be a category 3 or 4, something to watch out for later in the week. brent is falling as well in tandem with what nymex is doing, $70.20. >> if i can add on the hurricane float from the national hurricane center in the u.s. tropical storm bill has become the first hurricane of the atlantic season.. it's still past land. let's change gears and not talk about the weather anymore. joining us is steven pope, chief global strategist. he'll be with us for the next 45 minutes or so. let's talk about the markets in general. we have seen a negative start to the week, particularly in asia, ta seems to be gathering pace in europe. still in the summer. volumes are still very light.
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how seriously should we take declines like this? >> i think the bias is making a reserve to judgment. we are in for the summer lull. volumes aren't that strong. the appetite fades away now that we've got through the majority of the earnings season. a very good run-up on all the markets. natural to take some profit. generally speaking, when people come back in september, they'll hang on to the fact that you you saw an increase going forward. better things expected in quarter three and quarter four. i think equities will go higher again. >> a lot of momentum from cost-cutting and concern that the end demand, the consumer was not going to be there. we are seeing the consumer weaker, certainly here in the u.s., than a lot of people would have hoped they would be this
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time of year. >> i think that's true. we did notice that the retail sales figures were disappointing in the u.s. during the course of last week. however, i think what you have to look at is revenue versus cost. we've brought those figures down aggressively. there has a way of trying to create the demand. many of the heavyweight companies in the u.s. or the u.k. are selling on to an international platform and filling up government orders. not just turning to the man in the street. it's all selling it to government demand. so i think there is plenty of scope for improvement in the next three months. >> here in the u.s., one of the things the government is doing this morning is trying to get the assets sold of a regional bank, guarantee financial, coming on the heels of the sixth largest ever bank failure, colonial, last friday. there's some concern that we may start to see a second wave of
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the financial crisis. are you worried about this? and if that does come to pass, what does that mean for the smavths markets? >> i think in terms of another wave of financial issue in the united states, look at the results from the stress tests. who were those institutions that the authorities were pointing the finger at and saying they still have work to do? those are institutions that you probably stay away from from an equity investment. the other institutions that were quick to repay top money or given a clean bill of health, those are the types of names you can follow. they're making good money. they're trading the market. so they are working their magic to create good profit figures. those shares you can hold on to with some confidence. >> steven, this is christine.e. what do you make of this global story of china's sovereign wealth fund cic pouring $2 billion to buy u.s. mortgages?
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is it a sign that the housing malaise is over? >> i think it's a good sign. they've seen there is a beginning, signs of stabilization in the housing market. maybe the assets that spin-off from the housing market have reached a level where they offer an attractive investment. no one can pick out what is the bottom price. it shows a very good signal they're willing to put their hand in their pocket and bah out further u.s. assets. >> steven, we want you to continue staying with us. still to come, emerging market week. india celebrated independence day. the country's prime minister vowing to return the country to 9% growth. can they catch up with china?
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welcome back to "worldwide exchange." emerging markets week on cnbc. today we are taking a special look at india. the subcontinent celebrated its 63rd independence day this weekend. the prime minister said he would
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do anything to return the economy to 9% growth. is that feasible in the near future? for more, we're joined by the director at the czar gate consultants. good to have you with us. when you look at the bombay index, down 3.4%, if stocks continue to fall at this rate, will it hold the economy hostage? >> well, you know, we're probably looking at a market correction of 15 to 20%, which would bring the markets to more saner levels than where we were a few weeks ago. right now in dollar terms, down 9 or 10%. probably another 5 to 10% before we probably would see them putting money back into the market. in terms of the impact on comet, economy, this is natural,
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healthy market correction. the indian market seems to be taking its leed from shanghai. the rest of the world taking its lead from shanghai. not many people do understand that.. if that's the case, people need an excuse to sell off, and that's why india is selling off today. >> steven pope still with us from canter fitzgerald europe. healthy correction, what are your feelings? >> post the election, the return of a pro business, pro reform style of government coming through. i think we're on the cusp of seeing india make that big catch-up move and we'll start to see big numbers almost as impressive as china. are they seeing the government push ahead with infrastructure projects? and if we can ask a question, are we actually getting this road system completed around
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india? it seems to be mentioned in any magazine one reads but i'm stumped as to how near completion it is. >> well, in the last four to five years, a lot of the public government infrastructure projects did not go ahead as planned. and a lot of it had to do with just a lot of numbers terms of one minute who was in charge. the standard bureaucratic excuses that people had to deal with india for the last 15, 20 years. with the new highway minister, he is someone the market has a lot of confidence in. he can try to push this forward. he's looking to build 20 kilometers per day of road infrastructure.. we know how that can flow into the rest of the economy. you're seeing a bad monsoon. the only way you'll get the real
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economy working again in terms of their lower agricultural output is by building infrastructure. so we have a lot of faith.. he's on the road trying to drum up more capital. he needs to deliver. right now it's all talk. the next couple of months we should see a lot of good numbers coming in. >> where is the next leg of growth going to come from in india? we saw it first obviously with the technology, the outsourcing firms. where are things moving now? well, now, i'm going to go back to the whole infrastructure team. there are sort of two areas. consumer demand and there's infrastructure. and with consumer demand, you still have got 600 million people living in the rural economy where we are looking at high disposable income.
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how are they supported? they're supported by the government, helps minimum support prices and farm loan waivers and subsidies to the rural area. that will integrity the rural economy with the urban economy and looking at 10, 20 million jobs per year. they will consume a lot, buy mobile phones, cars, financial services. that whole area. 15, 20-year rural consumption theme. on the construction side, the last couple of years, the government had plans to build $500 billion of infrastructure. that's where we're fall woefully short. the power sector, india is adding 5, 10,000 mega watts per year. i'm not saying india can go up
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to china levels but go up to 20,000 mega watts of power. it all flows back to government support for projects. everyone has faith in the new upa government. they don't have coalition partners that are sort of driving them towards another angle. you know, we're seeing that already. we're seeing that in the government investment program. oil india, one company not listing in the next five years will be listing in the next few weeks. they need to fund all these programs. >> all right. thank you so much. we'll leave it on that note. thank you so much for joining. director of the czar gate consultants. here in the u.s., in other news, new york attorney general general andrew cuomo expected to file a suit against charles
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schwab, which led to the collapse of the auction rate market last year. the suit claims schwab misrepresented the investments. several brokers agreed to buy back securities from investors but schwab said it did not create the product and had nothing to do with the market collapse. in frankfurt, schwab shares trading down 1.75%. u.s. banking regulators want buyout bids by today.. last month, the texas-banked bank said there was substantial doubt it could stay in business as lon losses left it strapped for cash. guarantee is $16 billion in assets. the auction comes after the fdic shut down alabama's colonial bank on friday, selling assets to bb&t, the sixth largest bank failure in history.
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regulators hope three banks that made offers for colonial, jp. morgan and spain's bbva will hopefully today get in on the bidding for guarantee. christine? >> still to come on the show, the plot thickens in the ubs tax case as the investigation widens into hong kong. we'll bring you details as part of the global stock watch right after this break.
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thanks for staying with us on the show. you're watching "worldwide exchange." we are going to take a look around the global markets now. starting right here in the u.k. with the ftse 100, continuing to lose ground. overall down eight to seven points, 1.9%. let's look at some of the biggest losers on the u.k. markets today. the basic resources stocks tend to have been hit quite hard, xstrata and anglo american, some of the biggest decliners. we have pretty decent earnings also in that sector. the market shrugged off decent outlooks from these companies and pushing stocks lower on concerns about the global economic recovery. particularly on the back of the consumer sentiment data in the u.s. on friday which did
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disappoint. a bit of weakness coming through from those stocks. high price data this morning, the august house prices in the u.k. down by 3.1% versus a year ago. economic data later in the week, including minutes from the basic of england. let's cross to zurich and see what's going on in their markets. >> thank you, becky. the smi expecttending losses, d 1.6%. the only gainer is dental implant maker noble. they said this is the most compelling investment in the next 12 months. apart from that, watching swiss bank ubs. stock down 2.5%. new developments in the tax evasion case. a california client much ubs
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pleaded guilty to charges of tax evasion in california last friday. the tax fraud, part of it was the chaneling of funds into a ubs account that was held in the name of a hong kong entity. we do know that the tax evasion took place at a much more global scale than many anticipated. here positive news nat fda did give give its approval for a multiple sclerosis drug. let's go to silvia in frankfurt. >> same story in terms of headline news. heading south just like everybody else. the official excuse what we've seen out of the u.s. and asia this morning. in all honesty, we were in the profit-taking mode for some days. today we've taken that down with a vengeance. we can't seem to find our feet. down more than 2% at the moment. more or less from the word go.
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we clearly have given up some of the points on the down side, around 5230 or so. volkswagen is pretty much knocked down, a follow-through from friday. adam what's up in your place? >> thank you very much. a sour start to the weak for the asian markets. as we saw the futures progress, we saw haech selling across the markets. in terms of the weakest link of the chain, it came from the shanghai composite, slipping almost 6%, cracking the psychological 3,000. concerns about too much liquidity in this market. it'd tomorrow, waiting for the latest ipo, worth $6 billion u.s.
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we had a sell-off in the commodities markets in the u.s. last friday. anything to do with commodities fell very heavily in the chinese markets. moving up to north asia, the picture wasn't any defendant. in jap the nikkei slumping. gdp increased after five consecutive quarters of decline. overall, very weak picture. the asian markets were weaker. and futures picture worse throughout the trading day. >> sure, blame us, adam. let's like we'll take part from you as well. our futures pointing to a lower open for the week. it will be a busy one. not time for vacation yet. a lot of economic data. we'll get reports on wholesale inflation. leading indicators and housing. this morning or later today we'll hear from the national association of home builders. that's at 1:00 new york time.
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right in the middle of the session-ahead of the opening bell, we'll hear from lowe's. profits have dropped in the second quarter as the home improvement climate continues to feel the impact of rising foreclosure. cooler weather in the northeastern u.s. may also have hurt demand for seasonal items such as air conditioners. home depot reports results tuesday. that's your global stock watch. >> coming up, bad news for the economic market. will it be the consumer that short-circuits a global recovery? e-mail your views and questions to worldwide@cnbc.com.
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it's half past the hour. some of the top business stories from around the world. in the u.s., concerns about consumers pulling back spending. futures sharply lower. >> in europe, shares falling
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lower and commodities are the biggest losers. >> in asia, shares fall 6% on concerns about oversupply. hello and welcome to "worldwide exchange." if you're just joining us here in the u.s., we are set for a lower open at this hour. futures well below fair value. dow futures about 150 points or so below fair value at this point.t. just a little bit below that. nasdaq and s&p futures as well. the massive selloff across asia and continuing in europe at this hour. a lot of it the concern about the weak consumers that we saw at the end of the week. call it a bit of a hangover if you will. we will be getting numbers ahead of the low is. we'll have numbers from the
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consumer sentiment index. we are seeing a move to safe havens. the dollar and the yen both stronger this morning. let's look at the ten-year note. the yield moving down to about 3.5. right there right now at 3.5. the yield moving lower as the bond rallies. becky, we are seeing quite the pullback here. a lot of folks wondering whether this is it. we're getting na september surprise a little early. >> we are tracking those european bosses as they open in negative territory and continue to move lower.r. once again, a check on the markets. once again, they are lower. we're looking at over 2.5%. over 2.5 for the cac. the ftse and the smi, really lower. let's check on the dollar rates
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as well and see what's going on there. we are looking at a bit of strength for the yen. euro-dollar, 1.40. sterling continuing to come under pressure. versus the dollar, 1.63. this seemed to have started in asia, certainly as far as this week is concerned. what's it looking like? >> asia getting a chance to react to the consumer confidence dataing from out on friday.. a lot of concern about the pace of recovery in terms of the glebl picture. nikkei down 3 penal.5%. the kospi down 2.8%. the shanghai market down 3.6%. the sensex down 4.04%.
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brent is down as well. hurricane activity picking up. tropical storm bill reached hurricane strength becoming the first official hurricane of this season. according to u.s. government forecasters. something to watch as far as the oil picture is concerned. brent trading $1.64 lower, $69.60 a barrel. >> joining us for market strategy and analysis, the ceo of nautilus investments. still with us is steven pope, the chief strategist at cantor fitzgerald.. bruno, i want to start with you. a lot of folks saying these markets had gotten well ahead of twhemz this recovery story. we are seeing the consumer coming in here still very weak. at the end of the day, you've got to have some end demand.
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is this a dose of reality for these markets right now? >> yes, good morning. it's usually like this that markets do run ahead on the economy nine to six months. however, if we look at the expectations that the analysts have for 2007, the markets reacted on the positive surprises of the earnings. i think if we look at the numbers for the whole year and expectations that are priced d into the markets at this point, they are way exaggerated. if we look at the expectations on the stock 600, the analysts expect the earnings, not the turnover or the sales, the earnings to be up by 7% by all of 2009. now, if we look at the numbers in q1 and q2, they were dramatic. if we look at the numbers minus 45% in the first quarter and
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minus 39 in the second quarter, which means that in the second half, the earnings need to be better. ove over 600 of the biggest companies by 54%. as much as we had a positive surprise in the second quarter because of the numbers being less bad than expected, there could be a negative surprise in the making for the third quarter, seeing this v-shaped recovery is not taking place as of yet. >> steven, reaction or questions to bruno. >> just wondering, i don't see ta we are going to have a big catastrophic fallback in the third quarter. companies have given their guidance. it would be foolish of any chief executive to start giving out guidance on a positive tilt when the companies couldn't deliver. while i appreciate the slight caution you're showing and certainly the numbers you say about how second half earnings
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how to produce, what do you think about the guidance? why would they be giving upbeat tones if there are going to be problems that? >> well, i think one needs to compare the sales and the earnings. if you look at the sales, that's exactly where the consumer comes in for the biggest part. those sales are not picking up. i think that's going to have to be much better. that's hard to predict. of course, profits are better because of cost restructuring and savings that you have. that cannot be continued going forward until eternity. i think that's something that the analysts will have to realize. it's all about sales in the end. as long as the sales don't improve, which means that the sentiment of the consumers need to approve. they don't need to get scared to lose their job so they can start
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sxa saving and spend less. >> probably not in a situation where we were overflowing with optimism. a big rush for the consumer. discretionary was moving ahead. now it's coming to a part where we are questioning, confidence figures aren't so good. sure it's come back down to consumer basics. we can rotate what's in the portfolio. it doesn't mean we can embrace what's in the equity markets, does it? >> i was referring to the stocks 600 and pharm and all the other stocks as well. there is a lot of recovery going on in inventory levels..
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the question we have is whether we are at the level where we are compare normal liized numbers o still moving up on this. the baltic dry index, often referred to as a known speculative index has been dropping by 40% since may. that means that either there are no commodities being transported to the factories to make finished products or it means that all the commodities still doesn't show its effects. that is an indication we might have run a bit too far too fast. >> bruno, this is christine. we are getting news that china's cic is buying $2 billion in u.s. mortgages. is this a sign of a bottoming in
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the u.s. housing market?? >> if you look at the numbers, i think indeed there are more houses being marketed, being bought or sold. if you look at the turnover, there at the total value, which is being paraded, that is still going down. i think as long as we don't see stabilization in nose numbers, the housing market cannot be called really stable. one needs to see prices that are stabilizing or going up before a real substantial increase in this housing market, which was in the end the source of all misery, if i can say. that that stabilizes first. >> all right, bruno, good to talk to you. the ceo of nautilus investment. we want you to continue staying with us. the chief global market strategist. let's cross over to tokyo and check in from the nikkei. >> hello, christine. tokyo stocks faced a broad
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sell-off on monday. the nikkei fell over 3%, the largest fall in more than four months. investors' confidence took a hit from the latest gdp which showed an analyzed growth of 3.7%. the first quarterly growth in five.. real estate stocks and exporters posted big losses. meanwhile, the upcoming general election will be formally announced tomorrow, which made some investors focus on policy-relateded stocks. a nikkei report on sunday said the ruling liberal democratic party and the opposition democratic party of japan is promising to strengthen child care support if they win the vote. some child care facilities have already started mapping out expansion plans. they plan to open approximately 300 schools over the next three
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years. while another school operator is looking to nirks schools for younger children. both operators gained around 2% today. that's all from nikkei business report. back to you. >> thank you for that. bertha?? >> still to come, will home improvement stores see any pickup in activity? lowe's reports activity today and tomorrow we hear from home depot. before that, take a look at the futures. not a pretty picture right now. dow futures slipping even further, down 160 points above fair value.
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welcome back to cnbc's "worldwide exchange." here are some of the top stories we've been watching from around the globe. here in the u.s., banking regulators want buyout bids for jrnt financial groups by today. a texas group said there was substantial doubt it could stay in business approximate. guarantee has $16 billion in assets. the auction comes after the fdic shut down alabama's colonial bank on friday, selling its assets to bb&t, the largest bank failure so far this year. the financial times reports that regulators hope three banks that made offers for colonial will bid on this one. those three banks, jpmorgan,
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canada's td and spain's pbva. berkshire hathaway raised its stakes in johnson & johnson. it sold shares of in half a dozen companies including conoco phillips. the value of berkshire's stocks rose 30% in the quarter. in frankfurt at this hour, j&j down fractionally. home depot reporting on tuesday, up fractionally. united health care up just a hair at the moment. christine? >> japan is the third g-7 country after germany and france to pull out of recession.. the economy expanded 0.9% but
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marketed the growth in five mother as the government stimulus measures filtered through. a weak capital expendure raised concerns about the economy. rebecca? >> a final thought from steven pope at cantor fitzgerald. he's been with us for much of the past hour. one of the hot topics of the day -- not the day, maybe the year -- is the bonus culture, particularly in the banking sector. where do you stand on the debate? looks like governments around the world increasingly embroiled in this issue. >> right. understand where governments have taken an investment stake in the bank and are a majority shareholder. they want to keep an oversight role. that's what an extraordinary shareholder would do. where you have an institution
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not engaged in taking government money, they have to be allowed to pay what the market is dike imitatitatimitatin imitating. if people have performed well, they need to be rewarded. the minute we start cutting back, the people will see compensation elsewhere. >> however, if there are players in a certain industry, like the banking sector, where they've had government intervention to keep them afloat, surely if you say, governments can get involved in pay of banks but not in others, the banks that don't have state control at this stage could get involved in more excessive risk taking and find themselves being bailed out as well. if the government's involved in the sector, they have to take an interest in the rest of the sector. they are intuitively back
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stopped, a lot of institutions that are rivals with the other institutions. >> i think it's a situation where the developed world, u.s., u.k., europe, et cetera, have to step back and say, why did these problems happen in the first place? what can we learn from that? then they can start drawing up the new rule book we can agree on. so that there is a common sort of playing field that we're all working to, rather than the u.s. has one system and the u.k. something else. otherwise, you're going to find somebody will step out of line and try to become the next financial center from lonnon or new york. generally speaking, i can understand government wants to take a role. those institutions don't need the benevolent hand of government trying to reward their staff. >> thanks for joining us today.
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at least 50 minutes you've been with us.s. we appreciate your time. thanks for that.t. steve pope with us from cantor fitzgerald europe. squawk box follows "worldwide exchange." becky quick already in the studio. what have you got today? >> we've been watching those futures under some pressure. a lot of people asking, is this the beginning of a sell-off? after all the gains we've seen in the market. we have something for everybody today. we'll be focusing closely on the markets. the manager of the blue chip fund will be with us. this gets to be a very dicey time as people take off and head for their vacations. you see light trading volume. also, we'll be tackling the fed's next move. retailers checking into earnings
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central today and all week long as well. today we get lowe's, expected to report results around 7:00 a.m. eastern. will the consumer start spending again? and the health care battle rages on. democratic congressman andrew wiener will tell us about the debate. and dick army will tell us about the protest controversies that cost him a job. squawk box at the top of the hour. >>lets get back out to bertha now. >> after the break, we'll preview the u.s. trading day ahead. first, don't blink or you might miss it. usain bolt. still the fastest man in the world and getting faster. the jamaican smashed his own world record in berlin this
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let's get a look at the u.s.
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trading day ahead, with one of the few and the brave still working here in august. we're seeing the global sell-off. is this a pullback? >> i think it's a healthy pullback, no more than that. a 40% to 45% rally in the last few months in u.s. markets, miraculous by any standards in the current economic background. friday's news on retail sales was very disappointing, particularly with back to school, one of the three main periods you expect retail to improved, endorsed by michigan consumer confidence. the rest of the world slightly underwhelmed by japanese gdp up 3.7 pors an annualized basis. and the exports were very disappointing.
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so you can see with the dow and the s&p 500 and the nasdaq, a 2% pullback or near enough to start with.. you mentioned lowe's. a lot of other companies reporting from home depot, sach's and target. >> looking at the u.s. futures ahead of the lowe's. reports well below fair value. that's it for our program. i'm bertha coombs in the u.s. >> i'm becky mean in europe. >> here in asia, i'm christine tan. thanks for your company here on "worldwide exchange." 77 
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good morning. breaking news.. global markets selling off overnight. equity futures pointing to a sharply lower opening. it's official. we have the first hurricane of the 2009 season. other storms are churning and oil traders monitoring their radars closely. plus, a sunday afternoon upset. tiger woods, stunned losing the pga championship. "squawk box" begins right now.
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>> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick, along with carl quintanilla. joe is out today. our top story is the markets. the futures under quite a bit of pressure at this hour. a sell-off like we haven't seen in sometime. the futures down by 140 points below fair value. the nasdaq off by 25 points. the s&p futures down 16 points below fair value. talking about a major sell-off that kicked off in asia.. chinese stocks suffering their worst fall since september. sang high closing below 3,000 for the first time since june. you'll see that those markets, the cac in paris off by 2%. the ftse 100 off by 1.5% and the
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dax in germany off by 1.9%. some of that a carryover from friday. the s&p still up 48% from 12-year lows. >> triple-digit futures like that. shanghai, worst fall in 12 months.. hard to tell because of low volume or people having second thoughts about how far the markets have come. >> questions about the consumer too. we saw that with the retail sales numbers from the u.s. government and the consumer confidence number out on friday. a lot of talk about where this is going to go. very strong earnings reports from people and the companies reporting from most of the earnings season. it didn't come from strong revenue or sales but from cost cutting.g. >> the stories over the weekend about how back to school could be miserable.